Actionable news
0
All posts from Actionable news
Actionable news in OSTK: Overstock.com, Inc.,

Home Construction, and Regional and Community Bank ETFs Reflect a Healthy Housing Market

  • Investors seeking market exposure to home construction and the banks that support the housing market can invest without picking stocks using these three exchange-traded funds.

    The iShares U.S. Construction ETF (ITB - Get Report) has 44 components involved in home construction heavily weighted to homebuilder stocks. D R Horton (DHI - Get Report) and Lennar (LEN - Get Report) remain the largest components, with weightings of 11.5% and 10.75%, respectively.

    The iShares U.S. Regional Banks ETF (IAT - Get Report) has 54 components that are considered regional banks, but does not include the four "too big to fail" money center banks. US Bancorp (USB - Get Report) and PNC Financial (PNC - Get Report) remain the largest components with weightings of 15.9% and 11.3%, respectively. These banks are most likely to be involved in mortgage lending, credit cards, and small business lines of credit.

    The First Trust Nasdaq ABA Community Bank Index Fund (QABA - Get Report) has 160 components that are smaller publicly traded banks. These banks fund construction and development loans and commercial real estate loans for new communities and strip malls.

    Before we look at the weekly charts and key levels for these ETFs, let's look at key recent housing market data.

  • Latest S&P Core Logic Case-Shiller 20-City Composite

    The 20-City Composite had a year-over-year seasonally adjusted rise of 5.9% in February, up from 5.7% in January. The seasonally adjusted month-over-month gain was 0.7% in February down from 0.9% in January. From the July 2006 peak to the March 2012 trough, prices were down 35.1%. From the trough to the current level, home prices are up an unsustainable 44.3%, and are just 6.3% below the peak.

  • March New Home Sales

    This chart above shows sales of newly built single-family home sales for March totaled a seasonally adjusted 621,000, up 5.8% from 587,000 in February. Note how the 600,000-unit threshold has been a magnet since 1963. Note that the housing market bubble peak in mid-2016 was near the 1.3 million-unit total. This chart clearly shows that the sales pace for new homes is significantly below potential.

    The National Association of Home Builders reported that the inventory of new homes totaled for sale totals 268,000 in March, a 5.2-month supply. The median sale price of a new home rose to $315,100, up from $296,200 in February.

  • Home Construction ETF (ITB)

    Courtesy of MetaStock Xenith

    The construction ETF closed Wednesday at $32.02, up 16.5% year to date and in bull market territory 27.3% above its post-election low of $25.16 set on Nov. 9. ITB set its post-election high of $32.78 on April 27.

    The weekly chart for ITB is positive but overbought with the ETF above its key weekly moving average of $31.69, and above its 200-week simple moving average or "reversion to the mean" of $26.05. Weekly momentum is projected to slip to 85.68 this week down from 85.78, but still well above the overbought threshold of 80.00.

    Buy ITB on weakness to my monthly and quarterly value level of $29.67 and $28.30, respectively. My semiannual pivot is $31.07. Sell strength to my annual risky level of $32.63.

  • Regional Bank ETF (IAT)

    Courtesy of MetaStock Xenith

    The regional bank ETF closed Wednesday at $45.17, down just 0.5% year to date, but in bull market territory 23.5% above its post-election low of $36.58 set on Nov. 8. IAT is 8.3% below the post-election high of $49.24 set on March 1.

    The weekly chart for IAT will be positive if the ETF ends the week above its key weekly moving average of $44.80 and well above its 200-week simple moving average, or "reversion to the mean" of $35.16. The weekly momentum reading is projected to rise to 26.78 this week, up from 25.66 on April 28.

    Buy the regional bank ETF on weakness to my weekly, quarterly and annual value levels of $41.47, $40.61 and $39.38, respectively. Sell strength to my semiannual and monthly risky level of $48.17 and $50.22, respectively.

  • Community Bank ETF (QABA)

    Courtesy of MetaStock Xenith

    The community bank ETF closed Wednesday at $50.84, down 3.7% year to date and in bull market territory up 23.1% above its post-election low of $41.31 set on Nov. 9. The ETF set its post-election high of $54.54 on March 2, and is 6.8% below this high.

    The weekly chart for QABA will be positive if the ETF ends the week above its key weekly moving average of $50.46. The ETF is above its 200-week simple moving average, or "reversion to the mean" of $38.51. The weekly momentum reading is projected to rise to 34.48 this week up from 30.53 on April 28.

    Buy the community bank ETF on weakness to my weekly value level of $47.31. My quarterly pivot is $49.42. Sell strength to my semiannual and monthly risky levels of $54.80 and $56.06, respectively.


More